Under the Indirect Method of Preparing a Statement of Cash

question 65

Multiple Choice

Under the indirect method of preparing a statement of cash flows, a decrease in the balance in the Accounts Receivable account during the year is:

• A) added in the operating activities section
• B) subtracted in the financing activities section
• C) subtracted in the operating activities section
• D) added in the investing activities section

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Definitions:

Discounted

The reduction of the nominal price of goods, services, or financial instruments.

Proceeds

Proceeds refer to the total amount of money received from a transaction, such as the sale of goods, assets, or securities.

Compounded Quarterly

Compounded quarterly refers to the method of calculating interest where the interest is added to the principal at the end of each quarter, resulting in interest being earned on previously accumulated interest.

Financial Obligations

Debts, liabilities, or commitments that an entity is required to pay or fulfill in the future.